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Economist's Fodder for Dems: $61 Billion Cut Would Cost 700K Jobs
A new report out Monday from Moody’s Analytics economist Mark Zandi estimates that the House-passed seven-month spending bill, which cuts $61 billion in spending, would cost 700,000 jobs by the end of 2012.
Zandi’s report echoes one by the left-leaning Economic Policy Institute, which concluded the GOP bill would cost 800,000 jobs. Goldman Sachs has found that it could cause as much as a 2 percent loss in economic growth. (Image: Daily Kos) He predicts that this year the bill could cost 400,000 jobs and run the risk of a new recession.
Zandi estimates that the CR would reduce real growth in gross domestic product by 0.5 percent in 2011 and by 0.2 percent in 2012.
Congressional Democrats will be sure to cite new estimate as they argue against cuts to spending this year.
House Republicans argue that their bill should become law as part of a “cut and grow” strategy that they say, by removing uncertainty about higher taxes to pay for government spending, would spur spending by businesses.
A spokesman for House Speaker John Boehner (R-Ohio) discredited Zandi.
"The fact that a relentless cheerleader for the failed 'stimulus' - which the Democrats who run Washington claimed would keep unemployment below eight percent - refuses to understand that ending the spending binge will help the private sector create jobs is sad, but not surprising," said Boehner spokesman Michael Steel.
Zandi, who backed the 2009 Obama stimulus plan, also concludes that allowing the spending fight to cause a lengthy government shutdown would do deep damage to the economy.
“The economy is much improved and should continue to gain traction, but the coast is not clear; it won’t be until businesses begin hiring aggressively enough to meaningfully lower the still-high unemployment rate. The economy is adding between 100,000 and 150,000 per month — but it must add closer to 200,000 jobs per month before we can say the economy is truly expanding again,” he argues.
“Imposing additional government spending cuts before this has happened, as House Republicans want, would be taking an unnecessary chance with the recovery,” he states.
Zandi’s report echoes one by the left-leaning Economic Policy Institute, which concluded the GOP bill would cost 800,000 jobs. Goldman Sachs has found that it could cause as much as a 2 percent loss in economic growth.
He argues that long-term deficits need to be tackled, but that government borrowing is not crowding out private investment at this point, so reducing spending would not have the effect of quickly expanding credit for the private sector.
Zandi tells investors that he predicts both sides will find a compromise that cuts less than House Republicans are demanding, and that the economy will be able to absorb that compromise.
53 Comments so far
Show All"Zandi tells investors that he predicts both sides will find a compromise that cuts less than House Republicans are demanding, and that the economy will be able to absorb that compromise."
Does this guy take into account the cutbacks at the state level? The end of stimulus money? The continued decline in real estate? The increase in foreclosures? The increase in fuel prices? This is the way politicians behave: they always forecast job growth and then watch their optimistic predictions go down in flames. Much of the growth in the US has come from the financial sector, a bunch of parasites extracting interest from the rest of us and producing nothing of value. Only overseas has there been economic growth--in places like China. With austerity programs active in Europe, and the United States both at the national and state level, there is no chance of a recovery from the economic catastrophe we are suffering.
Yes, most of the "economic growth" during the past two years has been money being created by the Federal Reserve and churned through the financial sector, increasing the wealth of 2% of the population at the expense of the other 98%.
An Associated Press article last week that touted increased borrowing by businesses sounded like a positive sign until you got to the third paragraph and found out that 75% of the borrowed money was used to finance mergers and acquisitions that add no new jobs at best, and in a majority of cases result in job losses.
Although the article didn't say what the other 25% of the borrowed money was being used for, you can be sure that most of it was used to speculate on commodites, thereby driving food and fuel prices higher.
Yes, I noticed it too:
"He predicts that this year the bill could cost 400,000 jobs and run the risk of a new recession."
Wha? the old one has finished?
In my opinion there is little difference between 'stimulous' money and the government spending money on military weapons that have no, ROI, return on investment.
Chuck, you're a dumb fuck. Spending stimulus (stimulous) (stimu louse?) money on infrastructure is nearly always an excellent Rfuckin'OI.
Facts, stinking facts. Who needs to let facts get in the way?
One Democratic economist says one thing and one Republican economist says another. Whatever either one says doesn't really matter, because whatever happens, you and I will take it in the ass and the greedy-rich along with their whores in the government will steal more.
God damn AmeriKKKa!
Precisely.
Corporations love high unemployment and recessions since it gives them leverage to drive down wages.
Did you know staffers of Congress family members are exempt from paying back student loans.
For too long we have been too complacent about the workings of Congress. Many citizens had no idea that members of Congress could retire with the same pay after only ONE term, that they specifically exempted themselves from many of the laws they have passed, while ordinary citizens must live under those laws. The latest is to exempt themselves from Healthcare Reform... in all of its forms. Somehow, that doesn't seem logical. We now have an elite that is above the law. I truly don't care if they are Democrat, Republican, Independent or whatever. The self-serving must stop.
Proposed 28th Amendment to the United States Constitution: "Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States ."
This stuff proposing a "28th amendment" has been circulating for years. It's misinformation, and it doesn't belong in this forum. Please check your facts and sources.
Member of Congress and their staffs are not exempt from paying back student loans. Check out http://www.snopes.com/politics/business/studentloans.asp --
Members of Congress can retire after only one term, but they are not vested until after 5 years in office. Their retirement pay is based on 80% of their average pay -- but only after they reach the age of 62. So a Senator over 62 might be able to retire after only one term, but a Representative would have to serve at least 2 1/2 terms to be vested.
It's also not true that Members of Congress specifically exempt themselves from many of the laws they have passed (such as being exempt from any fear of prosecution for sexual harassment) while ordinary citizens must live under those laws.
Members may be exempted from arrest (not prosecution) for crimes only while Congress is in session. But sexual harassment is not a crime, it's a civil offense, and Members may be (and have been) sued.
It is not true that Congress has exempted themselves from the Healthcare Reform provisions. Neither the House nor the Senate versions, nor the final bill, exempted them. They have access to commercial health insurance through Federal Employees Health Benefits (FEHB -- the same thing all other Federal employees and retirees have) and they choose a level of coverage and pay premiums just like anyone.
see also http://www.snopes.com/politics/medical/28thamendment.asp
It's also not true that they don't pay into Social Security -- Members of Congress have been paying into Social Security since 1984
Your viral attack telling me that my post does not belong on this forum hints that you have a personal interest.
I'll post where and when I see fit and do not need your permission or acceptance.
"Although the student loan is not forgiven, agencies may make payments to the loan holder of up to a maximum of $10,000 for an employee in a calendar year and a total of not more than $60,000 for any one employee."
Above quote from the US Office Of Personnel Management.
Not exempt, BUT they receive up to $60,000 dollars of our tax dollars free while we save for and repay student loans or suffer through bill collectors phone calls.
" As of 2007, the average annuities for retired members of Congress were $63,696 for those who retired under CSRS and $36,732 for those who retire under FERS. Those figures are QUITE GOOD (my caps) about 2-3 times more generous than what a similarly salaried executive could anticipate to receive upon retiring from the private sector, according to the National Taxpayers Union."
Quote taken from Scopes.
I suppose it's okay for members of Congress to receive a "2-3 times more generous" retirement benefits on top of all the connections they made while pushing through legislation which benefits their corporate sponsors. And those same corporate sponsors probably have been paying them how much behind closed doors?
"Reignite" the recession?
For those of us still unable to find work; for those who have been forced to accept jobs they are more than qualified to do for wages forcing them to tighten their belts even more; for those who could only find part-time jobs; for those who have lost access to health care, never had access to health care, struggle to pay bills from health care, or have been forced to declare bankruptcy because of health care bills; for those who are going to lose their homes and for those who are still homeless; for those who can never retire...
when did the recession ever end?
Speaker John Boehner says, "The economy is much improved." SAY WHAT?
I live in California and I assure you the economy is NOT much improved. Four members of my immediate family are out of work and one is facing foreclosure. Our state is facing bankruptcy and the only action suggested for our state or for the national deficit is to cut funding for our domestic programs.
Hey, I got a better idea. Let's stop the endless immoral and illegal wars and greatly increase the taxes for the richest people in our nation. I think they should be able to manage with only a million dollars each year in income. Any income over a million a year should be confiscated.
Wow!! That would be wonderful. Then Speaker Boehner would be telling the truth, the economy would be in much improved!
(Don't hold your breath---I don't expect our corrupt members of Congress would vote against their generous 'contributors'.)
Boehner meant that it's much improved for himself and his greedy bastard friends.
Exactly. Boehner needs to be forced to live off his newly opened fruit stand in Tahrir Square.
Another idea. Quit giving corporstions tax cuts. Why were they needed in the first place? To get them into any given state. So they get tax cuts or subsidives and then do not pay taxes to the states. How f-cked up is that? God I just can not believe how stupid our rulers are or get over how many times they screw us. Read any of the other blogs that republicans troll on and see how stupid they are.
I loved todays article about how stupid so many Americans are.
My son's father is having to go to court today to try to collect some much-needed money from a customer who is many months behind on a couple of invoices. It's around $1,700 -- which, to us, is a lot of money -- basically almost a month of rent and oil to run the business. And this is just the most egregious, which is why he is going to try to get this through court. Everything else the payment of invoices has been slower and slower, whether it's from the State or a private company. Talk to a lot of small business owners and this is all you hear -- invoices being paid not in 30 days but 60 to 90 days. Add to that the inability of businesses to get lines of credit to carry them through until invoices are paid and, well, you see what's happening. And it's getting worse instead of better. Those small businesses that you see lining up and down the main streets and the ones you don't see that operate in less-expenses warehouse spaces are hurting -- and hurting badly. It's the domino effect that we're seeing and that is really not being talked about. But then the nature of what comprises a small business is often a joke. The definition of a small business is as broad as the definition of the middle class.
Good Lord!! We are still believing what our government tells us officially? After ObamaCare the CBO told us less than 1 trillion & now it's over a trillion? I agree with Tom, both sides throw "facts" at us that are different.
Must read a new book out about Americans (good citizens) from a small town that finally take a stand against federal tyranny (like the American Revolution). It's a thriller cause all the same issues are there (high taxes, corrupt politicians & bureaucrats crossing the land harassing the citizens). It's real & a must read cause it's history now showing us our true destiny in life. I recommend it.
www.booksbyoliver.com
I wonder how many of those 600,000 jobs are bureaucrats? I wonder how many of those jobs are people doing business solely off our tax dollars? Great article & first to see this here & not on CNN/FOX. Thanks for that!
The CBO is not "both sides." Yeah, get rid of the bureaucrats so that the corporations don't have to worry about anyone enforcing any regulations. Great idea, troll.
If we want to cut spending AND create jobs, it is counterproductive to make cuts that result in US workers becoming unemployed or that cut consumer spending on domestic goods. The Congress and Administration should be looking at hardware programs, big ticket items that involve purchases from abroad. That means defense/vehicles/electronics. Closing unneeded military bases overseas could save and also improve our stature as a moral leader in the world. For example, why do we have bases in Germany/England/Japan where there are stable democratic governments? Why do we have bases in the Middle East where they offend people who may turn to terrorism and where there are not democratic institutions to support? If we could see our government spending money where it really needs to be spent, some confidence would return.
I think in the coming years we will cut down on the foreign bases. And with Sec Gates recently telling the Army, "no more big land wars," the die has been cast in favor of long-range fighter/bomber missions/threats. That is why Boeing is getting tens of billions. It's more jobs and smarter world politics. It doesn't get much stupider than Iraq and Afghanistan.
You make an important observation, and your post needs more exposure. Cutting government spending often cuts jobs.
The reason for government spending or cutting taxes lies in the desire to increase consumer spending and thereby increase domestic employment.
I don't give your proposals total endorsement, not because of flaws, but because I haven't thought each through. You certainly have the correct concept, policy in cutting spending or raising taxes, must always consider the overall effect on job creation.
Policy makers need to consider the effects on the middle class and how it affects their jobs. In cutting spending, policy makers must consider the ripple effects. In changing marginal tax rates policy makers must consider whether those changes will affect short term and long term consumption/investment.
Government mandates and spending often has a varying impact on taxpayers, as well as unintended consequences such as influencing unemployment and the housing market. Additional consumer credit analysis and Moody’s Analytics’ Mark Zandi commentary is available at:
http://www.moodysanalytics.com/Products-and-Solutions/Economic-Consumer-Credit-Analytics/Economic-Research/Global-Macro-Dismal-Scientist.aspx
Let's stop clouding the issue with left and right. If his is math is good, that's all that matters.
Junk in, junk out. The equations are good only if they represent all of the relevant variables and if the numbers plugged in make sense. Don't know what model he is using or if it has been tested. I don't think the track record for economic models in general has been that good--witness the crash of 2008, a surprise to many.
Economic models don't account for embezzlement.
Many deniers in the Bush administration may or may not have seen it coming, but only fools ignored the collapsing housing market, the rising unemployment, and the huge institutional failures prior to September 2008.
Most people did not see it coming because the Republican presidential platform and messages proclaimed we did not have a problem in the economy. Records now show that the grand recession started in late 2007. People such as Buffet had talked about weapons of mass financial destruction for one or more years prior to September 2008. So lots of early warning signs existed.
I've never understood how people can ignore such glaring disconnects. The only thing people could not predict concerned the triggers and the timing of the country's financial collapse.
So what? Or, as Boehner said, "So be it."
Neither Corporate Party nor the Corporate/Wall Street Whitewash House gives a shit about us.
Time to dismantle the whole broken, corrupt, anti-democratic U.S. system.
Time for a General Strike, impeachments, recalls, and whatever else it takes to stop the Corporatist-Militarist Ruling Class killing us and destroying the planet.
looka hear folks--the jobs are gone, they're not coming back. The only action in our economy is on Wall street--these speculators have us in their grip and they are gonna take us down! Don't email, don't facebook--take to the streets if you want to stop corporate america. Note-- don't bother with the politicians--the politicians all work for Corporate America.
Politicians,( with very few exceptions) ,( "R's" and "D's"),( and one out of two "Independents) are paid Prostitutes of the Oligarchy,( look it up), who own them,( POTUS included), plus the Majority of the Supreme court AND the "Information machine" that controls the information you receive,( unless you own a Computer and have the time AND are diligent enough to seek and find the "TRUTH". As long as this remains the case, it's all downhill for us Poor Asses, until we reach "Critical mass" and "REVOLT"!! I am hoping that is what is beginning in Wisconsin, but I AM NOT "Betting the Ranch" on it.
"Wake me up when the Revolution Starts!!"
The planned sequence of making wars to enrich certain people while cratering the national budget as an excuse to destroy social programs, environmental quality and decent government oversight of business was never as clear as it is today.
People on the street realize this isn't about reining in entitlements like social security and medicare.
Unions now realize that this AIN'T about some rational wage structure or even good business practices.
This is about the total shaft for the poor and middle class of the USA. No concessions will be enough. The endgame really is tyranny.
I think they get it. We may see a lot of road to Damascus style conversions among some previously namby pamby liberals. Hell, just look at Nichols and his latest missives. It's quite refreshing to see him telling it like it is ("Walker is a dictator").
The benefit of the doubt and the assumption that we are all good Americans just arguing nuance is OVER.
Chris Hedges has the right idea. March 19, 2011 the criminals in government must be confronted. March 20 Bradley Manning will hear the roar of a people who want him freed.
Of course the evil bastards will send plants, quislings and agent provocateurs among us to destroy this awakening. What else is new? It won't work this time. We have critical mass. The people finally know their enemy.
What we need is a non-violent revolution to give our Government a permanent, pink slip. It has gotten so corrupt that it cannot be redeemed, no different than Egypt, ( except more subtle) who was backed for decades by the U.S. Government and Mubarak only lost power because he was no use to the U.S. anymore, much like Saddam in Iraq. America is governed by a Fascist Oligarchy backed by a military dictatorship. We need to fire the whole damn lot of them and start over.
March 19, 2011. Recommended clothing: Yellow track suit (GRIN).
Or, like the doctor told the guy with a real nasty STD, "No need to cut it off. Just leave it alone for a while and it'll fall off."
Boehner and the rest of the Republicans should now be called to give their economic projections from these spending cuts. Since they keep on quoting the estimated unemployment rate that Obama offered, now it's their turn. They must be held accountable for they could be vandalizing our economy yet again. They would love that actually because it would fulfill their objective to see to it that Obama fails. The only problem with Obama is he's a wimp.
To be fair, republican policies have been known to stimulate business spending and job growth. Mostly in China. They love China. Especially their government, 'cause those boys know how to rule!
Hilda Solís, where are you? You are the Secretary of Labor? Speak up. Obama is silent, he has been silenced.
Newsflash to the author- we're still in a recession, it never left.
If you have a yard, now would be a good time to dig up the lawn and plant a vegetable garden.
This is being too hard on Obama. He has tried his best to be Bush's third term. What is it that he hasn't given up to appease the Republicans, and, incidentally, the Wall Street banksters including those running the Treasury and the SEC.
Its always about greed, and the dems are no less guilty about that vice than their republican cronies. I hate this country and I shouldn't have to.
it is difficult to paint Mark Zandi, chief economist for Moody's.com, as partisan. Evidently Boehner's spokesman, Michael Steel, has forgotten Zandi served on Republican Presidential candidate John McCain's economic advisory team. Boehner, along with every other Republican in office, has seemingly forgotten the lesson learned when President Franklin Roosevelt instituted fiscally austere policies after the economy began to recover from the Great Depression (his initial policies resulted in halving unemployment from 25% to 12%) and in so doing inadvertently precipitated the beginnings of a second recession, commonly known as the Roosevelt recession, that was halted by WWII.
Herbert Hoover, a Republican President (1929-1933) implemented the austere policies and caused the depths of the depression. Roosevelt started at the beginning of 1933 with a collection of policies to undo a lot of this damage. Hoover did the real damage and not Roosevelt.
True, Roosevelt cut government spending in 1937, which may have led to the Roosevelt recession. The recession did not have the severity of what he had taken the country out of, but it did put unemployment back at 1935 levels. I agree with you in so far as it appears that his administration allowed fiscal restraints too soon. Whether it had a choice in the matter, historians and economists debate. Some economists believe that Fed monetary policy did the deed.
I take your point, and often use WW II, as the example of where huge government deficits with huge government spending can take a depressed economy and create a red hot economy. BTW, economists such as Krugman believed the current economy needed a stimulus much greater than $ .8 trillion. With hindsight I think Krugman more correct than wrong.
I fear the Obama administration, driven by tea baggers in Congress, and the bone head as majority leader in the house, will succumb or have imposed on it austerity, which will create another severe recession in an already fragile economy.
If only people could think.
There is one fact that is indisputable -- big business and the richest Americans (and the wannabe richest) own this country. I think we can all agree with that. (Or maybe I should say the richest people in the world own America.) We have been heading in this direction for some time, and it seems like it is in warp speed now. What is there left to do but to keep repeating the mantra that the super wealthy run this country and ONLY in THEIR best interests (which we cannot count on being OUR best interests.) If we repeat it enough times will people finally get it? Will people finally realize that unless we're extremely wealthy -- WE HAVE NO POWER over our own destinies? Voting is now useless. Our elected officials = useless (and bought.) The middle class, the poor, the elderly and disabled are damned. Maybe Americans don't want to think of themselves as middle class -- but if you don't already belong to the billionaires club, you will never belong and you are damned. The precious valuable resources of this country, once under the guardianship of all the people who live here, are damned. The air that we breathe is damned. The animals who stand in the way of big business's voracious appetite are damned. Greed begets greed and it will never stop until there is nothing left. If we do nothing this is our future. Perhaps average Americans will reach a tipping point of how much of this we allow to continue. I hope we do soon. I hope the unrest we see in the middle east will finally wake up the 98% of have-nots here. You see what's happening to the protesters in Libya -- that will be nothing compared to what will happen here when we finally say enough is enough. Because the biggest concentration of wealth and power is in this country and they will never allow the destabilization that a revolution would bring this country. And they certainly have enough weapons to control us.
As I reread my post I know I sound paranoid and severely depressed. And I suppose I am. It's just that I see what's happening and I sense the danger in it. I feel the pain of what humans are inflicting on each other and on the earth that sustains us. I'm not alone here, am I? Maybe I see things too black and white. But I do know that what I feel is indeed pain and sometimes it is hard to have faith in the human race.
Here's an alternative view: The rich are rarely some of the best people on the planet. To hell with them. With a little luck an American can have what he needs. If you feel powerless and want more, try to join a union. Unions are our best hope of keeping some power in the political process. It's not a lot, but it is real. This is the fight that the rich are currently waging. They know if they smash the unions, then nothing stands in their way. In the last election, 7 of the top 10 money-givers were right-wing corporate groups. The other 3 were unions. Get rid of the unions and the corporate view is all anyone will hear in future elections. Now that's severely depressing.
You are not paranoid and you are not alone feeling this. It's a very grim future if we continue on this path. We're not going to change the corrupt politicians, (both R and D) now in power. The system that was meant to have checks, balances, safeguards has been brilliantly dismantled by these bastards. Instead focus your energies and passion on your local community. Talk to your friends, family, neighbors, co-workers. For every mind that you awaken, we build the momentum for a people's revolution as we are witnessing in the middle east, and to an extent in Wisconsin. Wisconsin is a good sign. It's shows that Americans still have the ability to become energized and fight for individual rights and dignity. They may have the wealth, the power, the military force, but we the people have the numbers against which we can bring them down if we are united, and not let them manipulate our fears to divide us.
In Wisconsin, the uniting force was unions. Without unions, how does a movement come together to fight against a slow lowering of wages and benefits to American workers?
From the article: "He ]economist Mark Zandi] argues that long-term deficits need to be tackled, but that government borrowing is not crowding out private investment at this point, so reducing spending would not have the effect of quickly expanding credit for the private sector."
I agree with Zandi. How could government borrowing be crowding out private investment? Businesses have never been more profitable, despite high unemployment, and are estimated to be sitting on as much as $2 Trillion in cash. Businesses would invest some of this cash by expanding capacity or hiring more people if there were consumer demand to be met. There isn't, so they'll keep hoarding their money.
Robert Reich, Dean Baker, James Galbraith, Joseph Stiglitz and other economists have advocated a solution to our economic woes: "Jobs now. Deficits later." The deficits can be tackled as soon as this country gets to work again. The government, acting as the employer of last resort, can fund infrastructure improvements that will 1) put money in the pockets of workers, thereby increasing consumer demand and 2) provide us with the roads, bridges, tunnels, high-speed rail, etc., that will enable us to catch up with the rest of the industrialized world.
The austerity that Republicans are recommending will do nothing but perpetuate and worsen the recession. IntotheCrosshairs is right, too. Spending cuts will "fulfill their [Republicans'] objective to see to it that Obama fails."
Well said.
What Zandi says and with which several other economists agree are right on as far as they go, but they are and will continue to be merely band-aids until none of the main problems is tackled, and that is a healthy dose of the redistribution of wealth. And the best place to start that is with a complete revision of the tax code. You won't see that happen until we get rid of the super-rich plutocrats (both Republican and Democrats) who currently run our country. We need more liberal progressives (or progressive liberals) to turn things around - - - but begin with a new tax code, then get on to repair of the infrastructure, development of "clean" energy, etc.!
ithe class war is on
but how can this be?i
isn't america this classless society?
compliments of capitalism